The clerk. Items on the agenda today will appear november 3rd unless otherwise stated. Supervisor john avalos chair avalos, vicechair supervisor tang and supervisor cohen. Item no. 1, please. City clerk [appointments, Citizens Advisory Committee for the Central Market street and tenderloin area] hearing to consider appointing two members, terms ending august 2, 2019, to the Citizens Advisory Committee for the Central Market street and tenderloin areacity clerk sf 11234 there two seats. Supervisor john avalos thank you. Mr. Hall could not be here today. Bradford paul. Next person . Antionetta stadlman. I have been part of this and would like to stick with it. Do you have any questions . Supervisor john avalos yes, if you can talk about what your contributions have been to the committee . Well trying to get decent standards and competing or activating. The words skip my tongue. The various contributions to move out into the neighborhood. I have been in an sro in south of market for 23 years. We are starting to see a small amount come into our hotel. So i would like to be able to see the results of all this gets distributed down from my viewpoint and the sro community and up and down the street. Fixing up Market Street and doing improvements there helps the spin off on the streets going north and south of it. Supervisor john avalos great. Thank you. Well go to Public Comment. Any Public Comment . Public speaker wisdom intelligence would apply to humanity, to all sorts of charging conditions benefits to living transients to take care of the young people. Also petitions for handling external section with public speaker my name is ramon smith and i have known him for many years. She is very dedicated to the community and i see no reason not to continue. Thank you. Is there any additional Public Comment . Seeing none, Public Comment is closed. Colleagues . Supervisor tang . Supervisor katy tang thank you very much. I know mr. Paul reached out to us and based on his experience and his current role on the cac i would be fine to reappointing him to seat 5 with a waiver and antonette stadlman as well. Supervisor john avalos okay. Well take that without objection. Item 2. City clerk [appointment, Soma Community Stabilization Fund community Advisory Committee raymon smith] hearing to consider appointing one member, term ending april 27, 2017, to the south of market Soma Community Stabilization Fund community Advisory Committee. Vacant seat 3, succeeding m. Alicia duke, term expired, must be a senior or disabled resident of soma, for the unexpired portion of a twoyear term ending april 27, 2017. City clerk sf 21234 there is one seat and one applicant. Supervisor john avalos okay. It makes our work easy. Mr. Smith, please come forward. Should we have the appointee to advocate on behalf of seniors. Im 68, i am a senior and disabled and a veteran. In the from some years i have been here in San Francisco i have been involved in improving the public life for those especially in district 6. As you know we have a lot of seniors and disabled in there. In the years i served, i dealt with housing because i share Housing Community and also continue to advocate for more Affordable Housing for seniors and disabled people. We have also the sro loan program which have alluded to sros in that community and i should say that not only would i like to continue to advocate but in the south market. Before ada came into being, there was section 501, section 503 and section 504. I was appointed to evaluate on those eventually came to ada. Ada is a good piece of tool to work with but there is so much more to work with especially in the south of market. We have a very large concentration of seniors and disabled and veterans with low income. Thank you very much. Supervisor john avalos thank you. No questions from the panel. Okay. We can go to Public Comment. Is there any additional Public Comment . Seeing none, Public Comment is closed. Colleagues, do we have a motion . Okay. Motion by supervisor cohen and second by supervisor tang and well take that without objection. Thank you. Next item. City clerk [appointments, eastern neighborhoods Citizens Advisory Committee] hearing to consider appointing two members, terms ending october 19, 2017, to the eastern neighborhoods Citizens Advisory Committee. Vacant seat 10, succeeding toby levy, term expired, must be nominated by the district 6 supervisor and confirmed by the full board, for the unexpired portion of a twoyear term ending october 19, 2017. Vacant seat 11, succeeding henry karnilowitz, term expired, must be nominated by the district 6 supervisor, and shall live, work, own property or own a business in the plan area they are appointed to represent, for the unexpired portion of a twoyear term ending city clerk sf 31234 there are two seats and two applicants. Supervisor john avalos okay. If we can call the first applicant. Mr. Toby levy. Im for rean appointment for the product open space committee. I was former cochair of the western Soma Citizens Task force and i was the first appointed to the eastern neighborhood cac and the eastern neighborhood cac is seen as an over sear of the western soma plan adopted by the planning commission. I see my role in helping the western soma Task Force Plan come to fruition. I live and work in south of market on south park and i view my role now as a very broad representative for open space as well as the western soma plan. I served there now for two terms and its especially auspicious since we are getting a lot of development south of market and western soma. Thank you. Supervisor john avalos great. Thank you very much. Next applicant is john elberling. Good morning, supervisors. My name is john elberling. This is a first opportunity for me. I worked and lived in south of market for 40 years. I have been involved in all the planning processes city planning pretty much in soma for all of those decades. The reason i would like to join this east neighborhood cac. Im already a member of the soma neighborhood cac and even though the programs are overlapping for Pedestrian Safety and street sweeps and other category, they dont have much communication unfortunately. They really dont team up. What i would like to do by being able to be on both is really bring some coordination and in their Decision Making and discussion about what to fund and what are the best priorities over all. I think that would be a help. Also the Stabilization Fund cac has wonderful participation. All the community groups, our agencies they really follow it and come to our meetings and very much engaged with us but unfortunately cac does not have that kind of extensive participation from soma. It just doesnt yet and it really should. I really hope to, you know, youve leveraged good participation to improve the Community Engagement in these neighborhoods. Supervisor john avalos great. Thank you. Well open up this item for Public Comment. Public speaker leaders. Senators and petitioner and heroes and talents one should contribute for people of population and having true false of internal nourishment of true success. Good conscience. Destiny. One has courage for life of destiny, and true meaning and highly noble of nature. One expression for target of goals and principles subnature original possibility and could stand high to be a perfect superior holy person and carrying on ones career. Supervisor john avalos thank you very much. Is there any additional Public Comment . Seeing none, Public Comment is closed. Colleagues . Supervisor tang . Tang tang supervisor katy tang i would like to make a motion to appoint toby levy and john elberling. Supervisor john avalos well take that without objection. Thank you. Next item. City clerk [appointments, park, recreation and open space Advisory Committee] hearing to consider appointing one member, term ending february 1, 2017, and two members, terms ending february 1, 2018, to the park, recreation and open space Advisory Committee. Vacant seat 3, succeeding nicholas belloni, resigned, must be nominated by the district 4 supervisor from the organizations listed in resolution no. 39113, for a twoyear term ending february 1, 2018. Vacant seat 4, succeeding molly park, resigned, must be nominated by the district 4 supervisor and from district 4, for the unexpired portion of a twoyear term ending february 1, 2017. Vacant seat 17, suceeding toby levin, term expired, must be nominated by the district 6 supervisor and from the organizations listed in resolution no. 39113, for a twoyear term ending february 1, 2018. City clerk sf 41234 there are three seats and three applicants. Supervisor john avalos great. We have three seats and three applicants. Lets start with jordyn aquino. Good morning, supervisors, my name is jordyn aquino, i have been a resident of San Francisco since pursuing my degree. I have served as a public aid as a senior and administrative analyst for San Francisco public works. I currently serve for application support for Information Technology where i have the great opportunity to train and support local Business Enterprises interim employees and external contractors or our organization electronic contract systems. I believe i will bring great value to parks and open Spaces Community because i have great faith in my community and leaders and every opportunity to allow district 4 grow and strive as a positive community in San Francisco. I currently volunteer for a Community Clean team, cleaning up waste and around ocean beach and planting across sunset boulevard. I also volunteer for the Front Yard Ambassadors Program implemented by the Supervisors Office which allows homeowners to transform their yards to echo friendly environment. I believe that through programs like this, this sense of community involvementen insures our constituents celebrate their own sense of Neighborhood Pride and provides a Safe Community for children and families to walk, play and even run. As an avid runner myself, i do believe that seeing such Civic Engagement and such projects come to life in my district only motivates me to find ways to make our areas more beautiful. As a young adult living in San Francisco i have always desired to find ways to support the Public Policy in the city that i felt the most alive with. I have found ways to identify with communities and have found myself most enthusiastic when im with colleagues who share that same interest in my community. As i advance my career in Public Service i have found the experiences that i thrive for and the knowledge that i yearn fore develop through the involvement and love i have for San Francisco. This is why i believe i will make a great contribution to the parks and recreation open space Advisory Committee. Supervisor john avalos thank you very much. I dont see any questions from the committee. Well go to the next applicant. Heather fuch . Good morning, thank you supervisors avalos and tang. My name is heather fuch. I come to you as a resident for district 4 in the open space Advisory Committee. Several years ago i assisted supervisor tang while i was in college. It was supervisor tang that reminded me to become more involved in San Francisco communities. My proudest accomplishment working with supervisor tang was conducting reach in Human Trafficking in the sunset as well as the conflicts among state and city laws in regulating these establishments. This was sometimes difficult and frustrating work but it gave me the inside look to capacity of local government. With an academic background in government facilities, it allows me to work in this field. I work for a Large Law Firm downtown and helps me with my skills. My passion lies with government and i plan to pursue a secondary in law and policy. Im eager to serve my community in this new role and look forward to this opportunity. Supervisor john avalos thank you very much. No questions from the committee. Thank you for your presentation. Our next up is toby levy. Supervisor my name is toby levy where im trying to get more money to acquire for open space. We are making progress, but as i said with my eastern neighborhoods experience, the funding comes from impact fees which are controlled by the eastern neighborhood cac and there is a very big need for the coordination between the eastern neighborhood cac and prozac. Im proud to say that weve been working with the planning recreation and parks and im part of the association for 9 years advocating the redevelopment for south park. We have raised over half a Million Dollars to do this. Supervisor kim got us a Million Dollars on the park fund and we used the impact fees and im proud to say we are having Ground Breaking on november 10th. That is the culminate of all the efforts, but i see my role from improving south park is for the rest of open space in district 6. Supervisor john avalos just a question, where do you see the sites for district 6 . There is two sites. One is available and the other one is not. Both are very expensive. The question i have is can the Real Development thats happening in central soma, those impact fees just the development of 5 m, the flower mart, the tennis court and south of market western and eastern can have a swimming pool, more basketball courts. Another recs center. Aside from putting all of these people there. I see two roles. The private open space but what might come out of all of this massive development. We have an overall plan to meet the needs of the Affordable Housing coming south of market as well as the market rate. Supervisor john avalos thank you, we have a huge need there so we are counting on you. Okay. Well open up this item for Public Comment. Public speaker superior goddess having ones loving passion of love affair of fine beauty. One would be so benefit of loving way of relationship enable south nature of passage for loving and union of the two being husband and wife to the point of happiest day of perfection in all aspects of superficial and in the hint of true love of their well being. The imagined three characters can well having way or complete perfected methodology for all aspects of lives. Supervisor john avalos thank you very much. Is there any additional Public Comment . Seeing none, Public Comment is closed. These items are before us. Supervisor tang . Supervisor katy tang thank you very much with all the applicants that came forward. Im a little biased with our applicants. I would like to appoint ms. Jordyn aquino and heather fuch and toby levy. Great. Well Supervisor John Avalos okay. We are back in session. The rules committee. Mr. Clerk could you please call our next item no. 5. City clerk [hearing retirement board shareholder engagement with and divestment from fossil fuel companies] sponsor avalos hearing on the San Francisco employees Retirement Systems progress in protecting the citys Retirement Fund from the stranded asset risk that Global Climate change poses to their investments in fossil fuel companies, including their progress in implementing level 1 and level 2 of their social investment procedures, investing in a fossil fuelFree Index Fund, and divesting from the worst of the worst fossil fuel companies; and requesting the retirement board and retirement system staff to report city clerk sf 51234 Supervisor John Avalos great. Thank you. This hearing was called by myself and supervisor cohen who serves on the Retirement Systems board. We, the board of supervisors passed a resolution back in april 2013 urging the retirement board to divest from fossil fuel corporations. The reason we had done that resolution because we, the science shows that we already have the Oil Companies and the fossil fuel corporations already have in their reserves and it would cook the planet well enough to adapt to. That is available for humans to adapt to the over all climate and weve already added. 8degree celsius in the earth thats already decreased and if we do nothing into what is polluted out into the world that we would already trajectory to increase the worlds temperature by another. 8 degrees celsius. We are already 1 degree celsius to the degree mark so its critical how we can prevent humanity from going over the cliff that we are currently on. There are a number of people working all over the world trying to do what we need to do to prevent this cataclysmic from happening and even though we know we are at the edge of the cliff, very slow going. In San Francisco i think we get pretty good marks for having a plan but when you the comes to action i dont think we are living up to the the emergency that is before us today. The resolution that was passed in april 2013 was just one part of the tools that we are trying to create to move into a better future. Today we are hearing to see how the retirement board has been moving forward on the work of divestment and how committed they are for that to happen. We heard from a lot of retirement board commissioners over the years interest in moving forward, but it hepatitis been hasnt been the whole retirement board about divestment to happen and we havent seen how quickly its been brought forward to the staff and how staff is engaged in the real process of looking at Different Levels of act that retirement board commissioners have asked staff to engage in. So here today we have the director of the retirement board jay hush who will be presenting on the work of the retirement board. Well also hear from fred fliesh man, the analyst with 50. Org and green Century Capital management. The main bulk of the presentation will be from jay hush and will talk about the timeline and well go into questions that will be broken down into the Different Levels of divestment and engagement weve asked for about level one engagement about proxy voting and the engagement about what this process has been and to engagement as well well ask about how deep that work has been done and there will be work on the Commission Board to look at how we might address some of the most egregious polluters in putting up the most carbon from the fossil fuel corporations looking at the worst of the worst in that divestment realm. If we can have mr. Hush come up to give us a presentation. Good afternoon, supervisors. I provided you a very brief timeline of the actions that weve taken, the retirement board has taken since we are presented with the board of supervisors at the may 18, 2013 Board Meeting. We have an investment policy that supervisor avalos spoke of. We have three levels. The first level is the active voting proxy with the companies we own related to a specific topic. In this case it would be climate risk or more generally climate risk or fossil fuels. We have a level two engagement which is more activism. We have in the past written letters to the companies we own to urge them to change certain behaviors and in this case we also have the ability to join with other public plans and other public assets and urging these companies to change some of these behaviors. A level three is restrictions to be placed on investment in Certain Companies in this case and that will be either in the event of having to sell off all of our holdings in the company and could take the form for identification the worst offenders or could be a restriction of adding additional investments. So following, receiving the board of supervisors resolution in may. October 9th, the board considered that decision and created an analysis of what level one and level two engagement of these companies would look like. We had a meeting february 19, 2014, where we presented staff analysis and recommends to the board on level one and two and that meeting the retirement board adopted level one engagement which is active proxy voting which entails identifying the resolutions coming before those companies that we own on the list and making sure we are voting in favor of more disclosure, of issues related to climate risk. Following that engagement in february for april, may, june which is really the bulk of the proxy season, we provided the retirement with the results of our votes and how we voted resolutions related to climate risk for all of these companies. Supervisor john avalos if i can just stop you with some questions related to that it was really good to see that the retirement board did schedule a discussion about engagement and it was actually very difficult to get that schedule in a timely way. We gave the memo or letter to the board in may of 2013. It wasnt until october until that was actually scheduled and trying to get that on for a very long time and things then seemed to move fairly quickly to have a board on the 19th for fossil fuel level one and would mean for the board to actively engage in Climate Change and you referred to as act of proxy voting on but on may 15, 2013, that based on the boards representation that there was a moment to engage in proxy voting and it didnt happen. We asked for more advanced notice to be able to evaluate this proxy vote. Even the commissioners believe there wasnt that type of advanced notice that was needed. But on the june 10th, meetsdz meeting that the board was retro actively informed that there was a voting on chevron and exxon. Why werent those included in the staff report for the may 13 meeting. The system is engaged and provided the advanced notice for those coming through. We have since remedied that for the proposed 2015 and what are being proposed for the identify 2016 season proxy season type of issues. We fixed that. We also as pointed out on the third page of the presentation in july of this year, we presented to the board an amendment to our proxy policy that would create a first level screening that would say regardless of the policy approves as our proxy provider would go through an analysis it would be a first level screening that if any of these resolutions dealt with more disclosure, more reporting or dealing with climate risk issues in business plan, that the instructions to the proxy provider would be to vote in favor of those. I understand. So looking pro actively that what you believe you will be engaged in the proxy voting. That communication was needed when there was advanced notice why there wasnt that proxy voting happening in 2014 . From a technical perspective, that information from our proxy provider, proxy Service Provider was not available in advance for and basically the policy, you know, dictated how they would vote in our behalf and once through their analysis and the policy that the retirement previously approved and that we were not voting in agreement with the group that we now have an affiliation with and strong support with that we changed the policy to suspend their analysis and voting in favor of these. Not to your point, its was it was not anything brought to our attention but at the same time have the same proxy provider and remedied i believe for the 2016 proxy season to let the board know in advance of what votes are coming up and how our policy would intend to vote on those. Who would be the staff to make that notification . It would be part of our report. Bob shaw is the one who works with the proxy provider. And he is now, like i said we can see on the Investor Network on climate risk. We can see all the resolutions they intend to file for the 2016 proxy season related to climate risk and we can identify what companies those are going to be filed with and that rob shaw and his team will be responsible for monitoring whether those resolutions actually make the ballot and would ensure we are vote negative voting in support of those. Is it fair to say that its passed Going Forward and the third one well be finally engaging in terms of active engagement. They will run through june and july. That ended in july. We are prepared to make sure that nothing like this happens in the upcoming 2016 proxy season and well make sure that we vote in correspondence accordance with the policy the board adopted in july and in accordance what we believe is the boards direction. Thank you. As of march 2015, Board Meeting commissioner cohen asked for a chronology of previous divestment and shareholders engagement and i was at that meeting as well. Yesterday holsman provided the information given to the board was incorrect when the board actually fully divested from sudan and commissioner cohen asked for an update at the next meeting. Did you have an update at the june meeting . I dont recall. Did tobacco lead to level one, two or three . I believe that level one or two would be effective and i believe it went directly to level three. It was the issue of asking companies to stop their main, their principal business. So they went directly to level three. To level three. Which could be possible for fossil fuel. Its too late. Weve gone from one and two. From this point on . Exactly. How about sudan . Sudan i believe we went to level two and did a Letter Writing Campaign to the companies we owned and asked them to provide information that would assure us that their involvement with sudan would not be a risk to the retirement system. That was a level two engagement. There were very few companies that we own that were on that list and we got responses back from the majority of those companies. The companies that did not respond are now on a list of restrictive investments to level three and asking for information to clarify their role against the list that had been generated and some of them i believe successfully were not included on the restricted list, but we have a list that we provide to the board on at least a semi annual basis of companies that we believe continue to aid and a bet the actions in sudan. Could you explain the levels. Levels 2 is activism to shareholders, it could be responses to the resolution and letter writing and to sudan companies, the letter writing of campaigns to give back to the retirement system to say they are not involved or make the board feel there was no risk involved. So thats why the engagement with level two. This is more information gathering. I was not in my position back then, but i was in the Board Meetings and i believe that was the rational. One of the reasons asked for previous votes on fossil fuel shareholder proposals and asked for the votes and information on how burdensome to the companies these proposals were. Have you compiled that information . We provided the last report on the 2015 proxy season in june. Our provider proxy voting provider usually does a summary of the season, the proxy season and we intend that when that is produced and it will be produced this fall well present that back to the board similar to the 2014 proxy season. That will cover all issues, but in particular there will be sections that identify climate risk, sustainability and Renewable Energy and the at the same time gas emissions and when that report is prepared by our analyst. We did it in the fall of 2014 which was sort of a normal business. Thats the timeline for this consultant to come and brief the board on what they believe is coming forward in the next proxy season. We do not have policies to cover. They will generally make a presentation to say we believe these issues will be coming forward. You dont have a policy, please provide us a policy on how you want us to vote these. At the same time they prepare a complete sort of a revisit of the previous proxy season which is still outstanding from them for the 2015. We did present it to the board for the 2014 proxy season. Great, thank you. So i kind of cut you off at your discussion of level one. Do you want to proceed to next levels . Also in june of 2014 through your office we were able to coordinate an educational session for the retirement board where we spent i think it was 2 hours hearing testimony related to why it is important for the retirement board to consider the risk of holding these types of fossil fuel investments and that was organized through your office in part. On the march 11th, we brought forward to the retirement board an analysis regarding our increase in engagement from level one to level two on fossil fuel companies and the policy and the retirement board approved enhancing the engagement to level two. And at the same meeting they asked staff to bring forward an analysis and report on possibly investing in a passive exfossil fuel invest fund and asked us to bring it to a meeting which we did. We presented an preliminary analysis and a report showing the impact of a possible investment of, i dont know the amount had been determined at the time but looking into 100 million in investment of fossil fuel Free Index Fund and that april meeting, the retirement board asked us to complete the Due Diligence and bring the recommendation back to the board on that type of investment and at that same meeting, the board which had approved a staff recommendation which was part of our recommendation the prior year that the board establish and esg committee that would not only look at Environmental Issues related to our investment process, but also social and governance issues. So at that meeting in april, the retirement approved a commission of the gsg committee. There are four in the committee, so we believe that was an important part of staffs recommendation that had been made the Previous Year that in fact the retirement board take a systemic look at not only punishing bad behavior once we have invested through folks through our investment policy but having an in grated approach before we place the first dollar investment. Thank you, a couple of questions on that. There was a discussion about doing a fossil free investment. Was that investment actually made of 100 million . It was approved. They asked us to complete our Due Diligence in april. We brought it back at the july meeting of 2015. They approved an investment of 100 million and passive fossil fuel income and i suspect the investment will be made by the end of this year. Its an approval and the amount is set and we have identified the provider of the index fund, the manager of the index fund that we are currently negotiating with. Back in 2013, when the board of supervisors first did our resolution the fund was 15 billion. Where are we now . I dont think we are at 21 billion but somewhere between 20 and 21 billion. So weve gone from 15 billion to 21 billion . Thats correct. How much of that was invested in fossil fuels . I believe when we appeared before the board of supervisors when you were considering it, it was about 565 million. And the last time we reported out to the board it was 480 million. I just talked to bob shaw this morning who is traveling and he basically said the stocks are down. So its probably another 1 decrease. We are below 500 million out of the 21 billion fund that are invested on the list of the contract. So without making a real clear decision around extracting sf funds from fossil fuel based corporations we are seeing the diminishment overall in the percentage of funds because the market has gone down, but we have seen the fund over all increase by up to 21 billion and despite that increase, weve seen a decrease at the percentage of what is invested without a decision made to extract funds with the markets are doing. Thats fairly consistent with the reasons why we want to do divestment to financially it makes sense knowing that a lot of the funds that are invested are used for trying to find more assets, but the Oil Companies have enough assets to cook the planet over and science has shown that we have to keep 75 of the assets on the ground in order to keep it from increasing. Based on what weve already seen why do you think its been challenging to make decisions to go to level three . I dont think there has been a difficulty with the retirement board. We both hold these actions in the index fund. But we have our own index fund. How much they have invested in these Energy Stocks we are buying basically an index product from them. We also have Discretionary Investment managers to their reflection and what the market has been related to fossil fuel companies. I dont have any information related to whether there was a sell off of any of these holdings by any of our Discretionary Investment managers but clearly we have not restricted them from buying these companies or required to sell. Thats what level3 is about where we tell them that now you cannot buy these in terms of what your evaluation is to invest on our behalf. Let go deeper into level 2, we met last week. I wanted to share with you with what you will be expecting today. When we met last week you indicated you met level two engagement to join incr. Can you remind me what incr means and the coalition investment funds, how did they in gauge in the membership through incr . Sure, i just came from a meeting this morning. Karen and i were in a meeting of the west coast part of incr. A group of an organization that is looking at various issues, sustainable investment, including water and definitely fossil fuel. There is a number of work groups that are available for us to join once we become members of incr, its the Investor Network on climate risk. We join the carbon Asset Investment risk which is the subject matter of the board of supervisors resolution. There is topics discussed as well as activities and actions. We have opportunities to sign onto letters and this represents trillions of dollars of invested money and we believe joining and signing on with that group adds more weight to our signature. So the types of activities that we have are the especially with the carbon asset risk initiative, there are monthly calls and seminars held on the east coast and west coast and we met with washington, oregon, calpers, as members of the incr we can levee research on what they have already done. There was a lot of discussion to making sure the academic information is available. A lot of those plans have already done that work. So we believe that even though we are relatively new to the membership that we can definitely leverage a lot of the work thats being done and the approaches they are taking. As far as opportunities, we would have opportunity to sign on as cosigners as the resolutions for any members that might be representing for 2016 proxy season. As we proxy introduced any resolutions themselves . We are evaluating to find out. There is very active plans as you are aware across the United States and they would welcome other incr members to join them in introducing those resolutions. So we believe there will be opportunities for us to represent the sg committee, the opportunity to be cosigners for the 2016 proxy season. Have there been any letters to the companies . We actually had a letter right before the esd committee we had an opportunity to write a letter to the provider. Just to your previous point they changed from one 1 year to the next regarding exxon and they wanted as clients of iss a group of public plans representing trillions of dollars to have an insurances from iss to have a consistent approach for the resolution from year to year. Those are the types of things that we will now have access to participating in as a group. Great, thank you. Just, i dont know if you said this, but incr is in Investment Network on climate risk. Yes. As of march 15th, a wider of level one engagement two activities were discussed. It was recommended the principals and to directly communicate with the companies operateing the proposals. Commissioner asked about rankings the companies and targeting the worst offenders and in pairing the Implementation Plan for its consideration and approval. At the march meeting i submitted a suggestion Implementation Plan and timeline and a sample letter to accepted a fossil fuel companies. What is the status of preparing level two Implementation Plan and timeline . We are in the process of implementing level two. As you will see if i can move on into the presentation on the final page, initiatives that have been taken by staff in particular because you know there was some concern over whether staff was engaged in this activity as reported on the last page or actually it starts on the bottom. No, it is the last page. In july of this year. Retirement staff, retirement investment staff coordinated meeting through the seven large Institutional Investment firms and we wanted it in Northern California but Washington State wanted to join us and in a series we believe that calpers, cal asters,uc, kaiser and we tried to limit it to Northern California and washington. There could be a lot of sharing information and sharing of ideas. Also in september last month, at the end of the month, retirement staff, investment staff helped organized through the common fund which is a large Institutional Investment managed firm, a meeting of 20 Institutional Investors from the west coast and again their focus is going to be on exploring alternatives, the viability of continuing to invest in those and the impact of having the risk of stranded asset and looking for alternative investments that would make more sense to present to the retirement board. These are two initiatives that again i believe show the investment staff supports the boards position and my position and this is something that we are actively pursuing. The esg committee how often has the e sg committee met . They met once. They were created in july . No, they were created in april and they met in july. And were the Community Members self selected or were they assigned . Actually i believe they were volunteers and i think president accepted all the volunteers. It actually is a quorum of the board. So we actually noticed all those Committee Meetings as Board Meetings because four of the seven Board Members who are on that committee. All four Board Members were in attendance at the meeting. When is the next . To the call of the chair which is commissioner my berger. Most likely in december because we lost the Board Meeting in november because of the holiday. The normal Committee Meeting would be the 18th of november, so it will be most likely december. We dont know if its actually being set in december . Its not established yet by the committee. I understand that the establishment is in positive direction and moving toward higher levels of engagement, but also there is a tendency that we see people studying things, people can make committees actually makes it even, thats where you put all the effort, but if they are not meeting, there is no effort. So i am concerned that the meeting, the esg committee doesnt have a meeting scheduled, there is no intention about when its going to happen. Beyond if i dont jondz i dont understand if there is a strong scope of work there or will away from the effort rather making that commitment toward that effort. I put in a rhea by staff by the committee. We presented the esg committee with a framework of identifying around Sustainable Investing and thats going to be a long process. Again, we met with people who are taking calpers. We believe we can do it more quickly because we dont have to reinvent it. Its out there. These are specific topics that we were assigned to report back to the committee which we were prepared to respond to. One is legislation now that mandates the calpers and cal stirs back to july 17th. There was a report that came from cal stirs related to what impact thats going to have on calpers. Thats one way we can approach it and that would be to, its not necessarily a worst offender but certainly thermal coal has been identified by stanford endowment and now by the state as some of the worst actors in this area. We are looking at overall investments that we have in fossil fuel companies, coal would be somewhere in the 480 million we currently have. Weve estimated and i havent really announced to the retirement board in preparation for the meeting, we estimated that our third Coal Holdings would be roughly 10 million. So its not even a significant piece of the 500,000. The connection of the state law is the production of the principal must be presented by cal stirs and calpers. Our preliminary analysis that it would not be a significant piece of the fossil fuel companies if we were to taggel on to say the retirement board would like to follow what calpers and cal stirs are now required to do. We have completed the analysis and the initial numbers are relatively low. I think its maybe just terminology. But i think he gate a date for july 1, 2017. If we were to follow them, we would be doing it after them. We would like to precede that effort and looks like weve been pushing in that direction and we should be able to do that well before that date. I meant follow after them. To say this is a reasonable restriction or reasonable entry into level three focusing just on the thermal coal company. Im sure we have far fewer investments that we would need to take care of and calpers was and im sure if that was the track the board took that we would be divested well before the board would be. Im sure the board can recommend that baby step including other baby steps to add to a large thing, then we can move quickly. I think that staff, i work as a member of the board of supervisors, im also on the air district. I know that we are very much driven by what staff produce and thats what comes before us. As staff was to put a very strong and Firm Recommendations that can lead to board action as well. This is what we want to see moving forward. The second time we got from the esg committee is what you mentioned commissioner make said president of the board asked staff to produce what they would consider a recommendation on the worst of the worst offender. The fundamental issue is there is a constitutional right in criteria that there is a 15 list and a carbon tracker 200 list maintained by Carbon Underground updated and then there are from a series of reports, the organization that we joined, they have come up with a determination of which cc1 test message cc1 test message cc1 test message cc1 test message even on a relative basis fossil fuel compared to the broad msci world in deck. The fossil fuel. Then on the Positive Side msci returned 13 in 2014 and is out performing the standard all country world index so far in 2015. To provide concrete examples and you mentioned some of these before, supervisor avalos, we partnered with our Portfolio Managers to view the equities held by calpers by february 2014 based on their carbon reserves. The total market value of spers was 560 million. The top seven holdings in particular are informative. These seven holdings alone account for half the total value of spers position on the divest many list. The largest stockholding was 11 million in the past 2 years, exxon declined 7 . Chevron with the Largest Holding and 16 million and declined over 38 . 24 million and the stock has declined 23 . 22 million of rio declined. And holding a 20 million position and these securities have declined in the past 2 years. So aggregated this is a significant total loss from these seven companies alone. As these examples show, the trend is apparent. Each Energy Company face decline in the 2 years since the board of supervisors voted to divest from these holdings. Looking forward, fossil fuel stock remain under pressure. The insight report from this month states the Energy Sector predicting this report the largest year to year decline in earning of 64 1 2 of all sectors in the economy. In addition chinas economy is transitioning toward a consumer led economy and shift for less Global Demand for oil and gas as was previously expected. This is a significant threat from institution from alternative and Renewable Energy sources. Important from Goldman Sachs that may keep prices low for the next 15 years. Jeffrey hurey told bloomberg there is a high probability that prices will be depressed until the end of the next decades. In closing i believe the portfolio from divestment will term in the cycle. Fossil fuel has reduced over the years. Even shell said that divestment is pursuing the market approach. Supervisor john avalos thank you very much. Just a big softball question and you kind of touched upon it but as we go deeper into what we can attribute the loss we are seeing across the board and fossil fuel companies success. There is a number of factors and they have led to some structural shifts of different parts of the Energy Sector. So coal, there is been regulatory action with the president Barack Obamas clean power plant law going into effect which will address Carbon Emissions from the worst polluters. China is demanding less fuel. These companies are dependent on International Demand at this point and there are big structural hurdles that they have to overcome building terminals on the west coast that have been protestors have delayed the power of or the building of. Significant amount of lower energy or lower cost natural gas on the market. There is becoming price parody with renewable sources so the ability to switch and substitute make it an easier substitution choice. A resolution that we had in 2013 from the board of supervisors talks about a lot of these actions that have an impact on the success if you will of the fossil fuel companies and shows that as regulations increase, as demand shifts and renewables become more salient in energy use that we see what is happening with the market. When that resolution was written, i didnt expect it to happen quickly. We are looking at a slow boil and thats what i expect to continue. What are your thoughts whether this is going to be a temporary cycle or these regulatory actions will increase and well see greater shifts in usage that would see this downward trend in the Oil Companies . Right, i dont think anyone expected the Energy Company to quite perform as poorly as it has. I think the things that you mentioned, the regulations, kind of the dismantling to opec and flood of oil on the market now have shifted markets globally that have a potential to look different Going Forward than in the past. A lot of these other investment firms have looked at in the 5, 10, 25year periods, the potential for these companies can go very much looking forward. If you hadnt invested in informs you fossil fuels would depend on performance but was never significant in either direction and the Energy Sector is the worst performer in this Energy Sector in 2014 and 2015. I dont have a crystal ball and i dont think anyone of us do, but there are signs of a structural shift that could stay in place for a while. And in general volatility. Correct. That its been the most vulnerable sector in the Global Economy since 2008. Supervisor john avalos great. Thank you. Thats all we have for the official presentations that are part of this hearing. We can go on to Public Comment. Well do generally well do 2 minutes per person. I dont have any cards. So if people want to speak, they can lineup on the wall where the doors are and come one by one. Please come forward. Just identify yourself before starting. Thank you. Public speaker my name is andy gillis, a resident. Im a concerned citizen. All the science that we have and that continues to come out indicate that Climate Change is moving more quickly than anyone anticipated. There was a report on the radio this morning about the rapid melting of perm a frost and methane, for me is nothing more than a bureaucratic decision. This is a decision that affects our future. We are talking about survival of our species and i just would urge you to move as quickly as possible to simply remember that this is more than a financial or bureaucratic decision you are making. I understand there is a process you have to go through, but please make it happen as quickly as possible. Thank you. Supervisor john avalos thank you very much. Next speaker please. Public speaker hi. Im jack affleck, a retired i have my pension and i want to make sure the investments are sound. I have to say that im losing patience with how long this is taking. 2 years the board gave instructions, to hey, cmon, lets divest. Like the last speaker said we are going to die if we dont get rid of this stuff. I was just making some notes during the testimony here today. We divested from tobacco for Public Health reasons and from south africa from social Health Issues and now we are destroying civilization in terms of Climate Change. We should really be divesting for those reasons but there is economic reasons its a good investment to get rid of this stuff because its been losing money and doesnt have a bright future. I can say in the state level we just passed sb 350 portion that said we would eliminate 50 of petroleum in california by 2030. Think what thats going to do to the Oil Companies if we succeed in that and we are pushing the goal to make that anyway. We can do all sorts of things to invest in that fuel. Try to urge the board to move ahead. Supervisor john avalos thank you. Next speaker, please. Public speaker hello, chair avalos and supervisors. I really want to thank the members of the committee for being here and allowing this meeting to happen. I think its really important to have the facts laid out for the public record. And i would say as active member of fossil free San Francisco has been working on the retirement board since the board of supervisors resolution. The timeline has been technically accurate. There has not been a lot of follow through since the action and thats been elucidated today. To lay it out, it took from october 2013 to july 2015 to ensure the level was being done properly with the guidelines. It took from february 2014 when the esg committee was originally approved by a vote to july 2015 when they were voted in a second time and had their first meeting to get the esg going. They were supposed to meet every 2 months and now they are going to meet quarterly. That meeting is also not video taped. The procedures that level one and two are part of are passed by the full board and procedures by the full board and we believe that tho anything having to do with the social investment procedures should be heard by the full board and particularly that it is well, it has a quorum of the board its not video taped or available to the public after the fact. To point out that sudan was a 6month period of level two before moving to level three and tobacco moving to level three and there is a status quo that in the last 50 years will determine the next 50 years but thats not how it will work with finite resources and lost opportunity cost in not investing in over that time which lost already over 100 million. Thanks very much. Supervisor john avalos thank you. Next speaker, please. Public speaker thank you supervisor avalos for initiating this divestment procedure and keeping on it for what is starting to look like a 3year process. The word glacial used to mean really slow and the retirement board seems to understand its in that sense. Even as glaciers are melting in the world. I wish i can be as gracious about them as i am about you. This is so crazy, the bureaucracy, the doubling back. We gave them an early push to divest and they are just going in circles and creating committees and they are stalling and reluctant and wont push forward. We need to see better performance. Its the will of the people of San Francisco, a worldwide significance San Francisco has been a great environmental leader and to see nothing being done is dismaying. Supervisor john avalos next speaker, please. Public speaker good afternoon. Im kathy sheehan, a retired environmental engineer and currently a member of the San Francisco Labor Council representing the International Federation of professional and technical engineers, local 20. First i want to start by thanking supervisor avalos for your incredible leadership. Its been a much longer hall haul and i appreciate supervisor cohens leadership and helping us move this forward more than what weve been able to now. I think its been adequately pointed out that the San Francisco board does not have to go step wise through the layers of divestment. That we have other examples as have been mentioned for tobacco and sudan which has gone much more quicker than this and its clear that investor meetings, networks and studies are no substitute for actions. They accomplish nothing in and of itself. Now it is time to act. I believe the staff needs to step forward with proposals to the board because the board has not done enough to promote the actions needed on what the board of supervisors have passed. I would like to see the board move forward with the worst of worst partial divestment which was suggested in march. The tar sands because of their intensive carbon foot prints and specifically the Exxon Imperial Oil and shell divestments which are owned by sf, which have been previously stated. The time is now, we need to act. Thank you. Supervisor john avalos thank you. Next speaker, please. Public speaker thank you, supervisor avalos. My name is aaron lang, the chapter of 21 in this city. I want to thank you for holding these and keeping pressure. I have been new to the process and i wanted to just support things said before but i want to bring up a couple small points. One, we talk about value in investment from exxon went from 196 million to 96 million. We didnt hear if they were the same number of shares but the dropping of funds. If we keep the number of shares, we have not invested. Second about the retirement system about hedge funds and how they are going to be trying to invest. Accept that we know that hedge funds are and they are not telling us what they are going to do. Third is what we talked about regulatory cost with fossil fuel, i think there is a very large liability here in the country in particular about fracking. The way weve been poisoning the water supply around the country and like the science of the tobacco company. If this continues we will have a big cost. Supervisor john avalos thank you. I appreciate the reminder of fracking as well which is not too far from whats happening today. Anecdotally there is a small town in texas where fracking was king and now they have no water because of fracking. Its when we talk about that kind of extraction. Thank you for bringing it up. Public speaker David Williams as a member of our Retirement Community representing 65,000 members of all of california and 13,000 of them being miscellaneous city workers and a number of private nonprofit workers in San Francisco has taken a position that we want retirement boards, sf spirs and all to divest in fossil fuels. Supervisor john avalos thank you very much. And anyone else would like to comment please come up by the wall and speak next. Public speaker good afternoon, thank you for this opportunity. Im pete albert, a retired member of local 1021. I am not a member of sf spirs. A member of retirement system, a Retiree Council of our union and work with the chapter west bay chapters and David Williams. I want to repeat what david said about our Union Representing 55,000 in the Public Sector all over Northern California have taken the position to oppose fossil fuel investments in the pensions in california where our members are involved. That is sf spirs and calpers. We are in seven Retirement Systems in california. So this policy that our body has applied to in the nine Public Sector systems and we are encouraging all of our members to advocate to this system. We have members who serve on the trustee board in mendocino and alameda and marin county and called snackers and they had a major presentation at their spring conference on esg issues and our trustees are working within their board to pursue esg issues and fossil fuel divestment. I want to expand on what david said to give you the Bigger Picture on our our union is involved. Thank you very much. Perfectly timed. Do i get a prize . Check with the clerk for that. Is there any additional Public Comment . Seeing none, Public Comment is closed. If we can call you back up to close out our hearing. I want to thank everyone from the public to be being here for watching closely the decisions that are being made here at the board and of course at around divestment and engagement, and just to close out, really we are trying to impinge on staff and Board Members that we would like quicker movement on the effort around engagement and to level three divestment. Clearly we have seen in terms of the success of what we are seeing in terms of a downward trend on the fossil fuel corporations going done and shows a fiduciary responsibility to make sure that investments are down and to make sure that we have a place for structures to move this conversation and decisions forward really are meaningful and the committee to move as quickly as possible to have the board before them proactive engagement effort to lead to the trends you want to see in terms of what our overall engagement of the market is going to be. I want to impinge upon that. With this hearing im going to schedule to the call of the chair to get a report back maybe a year from now to see how we are doing. We had an example with sudan and south africa. The stakes were high then but not as high as they are now with Climate Change in front of us. I would like to look forward to seeing you to report back on this level of the effort being one that has actually amounted to real change. Understood, thank you. Commissioner cohen . Supervisor malia cohen thank you very much to the board and staff. First the all, we have unique relationships with the entire board. There is a reference and comment that the board of supervisors are giving direction to the retirement board, i just want to correct that its the nonbinding resolution is a statement from the board. The retirement board is under no obligation. Thank you for helping me find my words. Under obligation to implement that. With that said, there are members on the retirement board that have taken, its taken time for them to be educated on exactly the subject matter in weighing up the options. Now, i understand and can certainly connect with the level of frustration heard from folks that came to Public Comment that it was a glacial case. Yes, it is a glacial case. Usually when you are moving that much money and there are many things that need to be considered. Also, whats also unique about the retirement board is that its really moved by the loss of money and in this particular case not necessarily a political opinion or political pressure. Whereas with the board of supervisors we move oftentimes under political pressure. The strategy to move an agenda item on the board of supervisors is different from this change on the retirement board w that said, there is some truth to status quo which i heard also described and that goes to the level of education and outreach. I do want to acknowledge jed hoelzeman who has been taking the time to educate people and he will share im sure candidly to those who have not been as enthusiastic to the education that he can offer. Truly its through his diligence and coming to the retirement board speaking in 3minute intervals on many different items. Hes done a very decent job. Jed, i want to encourage you not to be discouraged. Keep up the good work. It is actually working. However, maybe not to the pace you would like, but there is a change in the thinking that has occurred with some of the Board Members. One thing i do want to bring publically actually to ask mike may burger to schedule a meeting in november to continue to move forward and continue the discussion. I myself do not want to be considered and hope to be considered an obstruction. I do want to be a helpful hand in moving the conversation forward. I think thats all the remarks that i have, supervisor avalos. Whats the motion . Supervisor john avalos continue the call of the chair. Thank you, you remind me. I appreciate you wanting to schedule the meeting in november for the esg committee. I was just reminded if it takes too long to get the horse to water then it takes longer to drink outs of. If we can have a motion to continue to the call of the chair. So moved. Well take that without objection. We are adjourned. [ meeting is adjourned ] turn your phones off if there is no seats well open up a room in a little bit thank you
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